Venture Trends: Oregon & Southern Washington

Deepthi Madhava

February 2025

Venture capital investments in startups in Oregon and Southern Washington have slowed in recent years. Since peaking in 2021 at $2.8B, VC funding has steadily declined, with 2024 seeing approximately $586M, vs. $600M in 2023. This is a significant drop from pre-pandemic highs. Early-stage funding, including seed and series A rounds, has followed a similar downward trend since 2021. However, there are signs of recovery emerging for seed-stage financings. In 2024, $114M was invested in seed-stage companies in our region — nearly 1.4 times the amount invested in 2019. While not a full recovery, the trend is promising and there’s still plenty of room for growth in the region.

This isn’t just an Oregon story. Other secondary regions have also seen a pullback in venture capital, as well as Silicon Valley, since the pandemic. On the bright side for founders, venture activity is showing promising signs of recovery, fostering renewed optimism for 2025. In 2024, the total value of all U.S. venture investments crossed $209 billion across 15,260 financings. Both figures surpass pre-pandemic and 2023 totals but are still far from zero-interest-rate-policy era highs.

At Oregon Venture Fund (OVF), our exclusive focus on this region means the stakes are high—and it also means we care a great deal. And that care drives action.

Despite broader market headwinds, we are observing some counterintuitive trends. OVF’s fund size has steadily grown and we’re investing more than ever. Between 2018 and 2022, OVF deployed $53M in venture capital in our region. From 2023 to 2027, we’re on track to invest $92M locally—a 74% increase.

So what’s driving this momentum, and what types of deals are we making?

• The Rise of Distributed Teams
  More companies we back now have distributed teams. We typically invest in businesses with at least one C-suite leader in Oregon or Southern Washington, and these key individuals often build out their teams locally over time. Distributed employment models allow companies to tap into multiple regional capital pockets while expanding access to a broader deal flow for investors like us—a win-win for both founders and funders.

• AI Innovation is Growing
  Our region is home to an abundance of AI expertise and the number of AI-related startups in our deal flow is rapidly growing. We’re seeing both AI-native applications as well as established companies integrating AI into their existing products. A few recent AI-related investments in our portfolio include:

• Distributional – Enterprise AI testing platform purpose-built for continuous testing of AI applications to make them safe and reliable.

• UpSight Security– Endpoint security AI engine using small language models to predict, detect, and evict ransomware.

• Magnify – Uses AI to automate customer success for large enterprises

• Digs – A collaboration platform for home builders leveraging AI

• Absci – Using massive proprietary & public data sets, creates next-gen biologic drugs using de novo design and AI optimization.

Beyond software, companies like NLM Photonics, a material science innovator, is tackling one of AI’s biggest roadblocks—the bandwidth and power consumption challenges of data centers. As AI adoption skyrockets, such infrastructure solutions are more critical than ever.

There are, of course, other startups in the region that are bringing the power of LLMs to vertical enterprise software, workflow solutions, healthcare tech, media, industrial automation, and other markets.

• Backing Our Portfolio Winners
  We’ve doubled down on our best-performing companies—while we don't pre-allocate funds to our portfolio companies, approximately 50% of our investments each year go toward portfolio companies meeting or exceeding their milestones. Some of our recent follow-on investments include Hydrolix, Customer.io, Wayfinder, Eclypsium, Kivo, and Cloud Campaign, most of which have successfully raised larger growth rounds.

We don’t pretend to have a crystal ball (though we’d invest in one if we did!), but we’re optimistic about 2025. Strong companies are still emerging, and great founders continue to build.

If you’re a startup founder and we haven’t met yet, let’s change that—reach out to me at Deepthi@oregonventurefund.com or on LinkedIn.